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How to buy an individual health insurance plan

By Posted : November 2, 2017

How to buy an individual health planHealth insurance is one of the most important purchases you'll make all year. Comparing health plans and finding health insurance quotes and information has never been easy.

Let Insurance.com help you find affordable health insurance now.

Take heart, though. You have important consumer protections on your side, brought to you by the Affordable Care Act, also known as ObamaCare, which is still in effect for now. With a little know-how and research, you can find a health plan to cover you and your family.

When to buy a health plan

Before 2014, you could buy an individual health plan at any time of the year. But now, except for special circumstances, you can purchase individual coverage only during the period known as open enrollment.

Open enrollment for 2018 health plans runs from Nov. 1, 2017 to Dec. 15, 2017. This is a shortened period of only 45 days, instead of the 90 days given the last few years. 

However, some states are extending the time that people have to buy health insurance. Currently, those states are:

  • California – Nov. 1 to Jan. 31
  • Colorado – Nov. 1 to Jan. 12
  • D.C. – Nov. 1 to Jan. 31
  • Massachusetts – Nov. 1 to Jan. 31
  • Minnesota – Nov. 1 to Jan. 14
  • Washington – Nov. 1 to Jan. 15

You can buy a health plan outside the open enrollment period if you have a "qualifying life event," such as moving outside your insurer's coverage area, getting married or having a baby. You can also buy coverage outside the open enrollment period if you had a special situation that prevented you from enrolling earlier.

The main qualifying life events that will give you a 60-day “special enrollment period” are:

  • Getting married.
  • Having a baby, adopting a child or placing a child for adoption or foster care.
  • Moving.
  • Becoming a U.S. citizen.
  • Leaving incarceration.
  • Losing other health coverage due to job loss, divorce, COBRA expiration or aging off a parent’s plan.
  • Losing eligibility for Medicaid or the Children’s Health Insurance Program (CHIP).
  • For people with a marketplace plan already, having a change in income or household status that affects eligibility for premium tax credits or cost-sharing reductions.
  • Gaining status as a member of an Indian tribe.

You can sign up at any time of year for Medicaid or CHIP, which are federal and state insurance programs for low-income families.

Some health insurers sell short-term, or temporary, health insurance plans outside the open enrollment period. But these plans provide only limited benefits, and they do not count as sufficient coverage to meet the government's requirement to have health insurance. Remember, unless you qualify for an exemption, you pay a tax penalty if you don't have sufficient coverage for most of the year.

That fee is 2.5% of your yearly household income or $695 per person ($347.50 per child under 18). You'll have to pay whichever number is higher. This could mean you a family of four would have to pay more than $2,000 for not having health insurance for an entire year. 

You can’t be declined for individual health plan

Before health care reform, individual health plans varied widely in what they covered, and insurers could deny your application for insurance or boost your premiums if you had a health condition.

Now insurers have to cover you regardless of your health history, and they can't charge you more because of medical conditions. You qualify for health insurance even if you're pregnant, have a long-term condition like diabetes or a serious illness such as cancer. Health plans also can't cap the amount of benefits you receive, and they can't make you pay more than a certain amount out of pocket for health care each year. In addition, all individual health plans must cover a standard set of 10 benefits:

  • Outpatient care (such as doctor's office visits)
  • Emergency room visits
  • Hospitalization (such as surgery)
  • Pregnancy and maternity care
  • Mental health and substance abuse treatment
  • Prescription drugs
  • Services and devices for recovery after an injury or due to a disability or chronic condition
  • Lab tests
  • Preventive services, including a variety of health screenings, immunizations and birth control. You pay nothing out of pocket for preventive care when you see health care providers in a health plan's network.
  • Pediatric services, including dental and vision care for kids

Types of individual health plans

Although they must cover certain benefits, health plans still vary in how they are structured and how much of your health care costs they pay.

Health plans are divided into five categories to make comparing them easier. The categories are based on the percentage of health care costs the plans pay and the portion you pay out of pocket, including the deductible, copayments and coinsurance. The percentages are estimates based on the amount of medical care an average person would use in a year. The categories are:

  • Catastrophic - These plans generally have high deductibles ($6,850) and pay less than 60 percent of your health care costs. Only people under age 30 or who have a financial hardship can purchase a catastrophic plan.
  • Bronze - Pays 60 percent of your health care costs. You pay 40 percent.
  • Silver - Pays 70 percent of your health care costs. You pay 30 percent.
  • Gold - Pays 80 percent of your health care costs. You pay 20 percent.
  • Platinum - Pays 90 percent of your health care costs. You pay 10 percent.

Generally, the less you pay out of pocket for the deductible, copayments and co-insurance, the more you pay in premiums for the coverage.

How to buy individual health insurance

Ready to shop?  You have lots of choices: Comparison websites, going directly to a health insurance company via its website or call center, contacting a health insurance agent in your area or using your state’s health insurance marketplace (also called exchange).

Not all insurers sell plans through the government-run marketplaces, so you'll find more options by shopping both in and outside the marketplaces.

If you qualify for subsidies, you can get them only by buying through your state’s health insurance marketplace. Healthcare.gov has links to state marketplaces.

You could be eligible for a premium discount in the form a tax break if your income falls below 400 percent of the federal poverty level (FPL).  For 2018 health plans, the 400 percent threshold is $48,240 for a single person. Here are more examples:

  • Household of 2 -- income of less than $64,960
  • Household of 3 -- income of less than $81,680
  • Household of 4 -- income of less than $98,400
  • Household of 5 -- income of less than $115,120

You qualify for a plan with reduced out-of-pocket costs if your household income falls below 250 percent of the federal poverty level -- $30,150 for a single person (the government uses FPL standards from the previous year to determine eligibility).

If you qualify for a tax break, you'll see the premium savings as you shop and compare plans on the marketplace website. Keep in mind that catastrophic plans do not qualify for subsidies.

Comparing health plans

Think about your health care needs and budget, and then compare plans to find the best fit.

Here are questions to consider:

How is the plan structured?

A health maintenance organization, or HMO, generally doesn't cover care outside its provider network, except in special instances. You must select a primary care doctor in the network who coordinates your care and pay a low copayment for each office visit.

A preferred provider organization, or PPO, also features a network of providers, but still provides some coverage when you see providers outside the network. You have more flexibility with this plan than with an HMO. You can see specialists, for instance, without a primary care doctor's referral.

A point of service, or POS plan, works like an HMO if you see providers in the network and get referrals from your primary care doctor to see specialists. But you can also see doctors and specialists outside the network.

A high-deductible health plan with a health savings account features a higher-than-average deductible and a lower-than-average premium. The accompanying savings account lets you set aside pre-tax dollars for out-of-pocket medical expenses. Unspent money carries over to the next year, and you can keep the account, even if you change health plans.

Who is in the network?

Check the health plan's network to make sure it has a good selection of hospitals, doctors and specialists. Make sure the providers you want to see are included in the network.

What is covered?

Check to see if the prescription drugs you take are included in the plan's list of covered medications. Compare other benefits. Some plans may go above and beyond coverage mandated by law.

How much do you pay out of pocket for care?

Review the deductible, copayment and co-insurance amounts. The deductible is the amount you pay each year for covered benefits before the health plan pays anything (except for preventive care). The copayment is the fee you pay for each office visit. Not all health plans have copayments. Co-insurance is the percentage of covered health care costs you pay after you have met the deductible.

How much do you pay for coverage?

Compare the annual premium among health plans with the same coverage.

What's the bottom line?

Think about how much health care you will probably use in the next year, and compare how much it would cost in health insurance premiums and out-of-pocket expenses for each plan you consider. If you rarely go to the doctor, then you are probably better off buying a high-deductible health plan with a low premium than a more expensive plan with a low deductible.

Making a smart health insurance choice requires time and effort, but the homework you do now will pay off later when you and your family need care.

Related >> Guide to Health Plans

ACA open enrollment: What's changed and what hasn't after Trump cost-sharing reduction announcement

President Donald Trump recently announced that he will no longer pay cost-sharing reduction (CSR) payments to insurers in the Affordable Care Act (ACA) exchanges.

The CSR payments total about $7.2 billion annually. They help keep down out-of-pocket costs for about 7.5 million Americans with incomes less than 250 percent of the federal poverty level.

Premiums on ACA plans were already averaging 20 percent in 2018, but insurance companies are increasing premiums even more without CSR payments. Without the payments, insurers may also abandon the ACA exchanges and leave some Americans without an ACA plan choice in either 2018 or 2019.

Trump's announcement comes as millions of people in ACA exchanges plans head into open enrollment on Nov. 1. The Trump Administration cut open enrollment in half this year. It usually runs through the end of January, but open enrollment for the ACA exchanges is only Nov. 1-Dec. 15 this year. Plus, the administration cut marketing for ACA plans by 90%. Insurers and ACA advocates worry that the Trump Administration’s moves will reduce enrollment and create unbalanced risk pools, which will mean higher premiums. 

What does the CSR announcement mean for open enrollment?

Trump's announcement doesn't affect open enrollment. It still runs from Nov. 1-Dec. 15.

Losing CSR payments may also not change the plan offerings. Insurance companies already signed on and set their premium increases for 2018.

However, some insurers could argue that losing CSR payments allows them to get out of the 2018 contracts. In that case, they could try to leave, but states may still stop them from leaving.

Even if all insurers stay, members may see higher than expected premiums in 2018. Insurers need to comply with an ACA provision that requires them to keep down out-of-pocket costs for lower-income members. CSR payments helped insurers do just that. Insurance companies will now need to figure out a way to fill the funding gap. One way is to increase premiums.

A recent report by Avalere found that premiums for ACA “silver” plans will increase an average of 34% in 2018. Silver plans are the most popular plans in the ACA exchanges and insurance companies have proposed large premium increase for those plans. Insurers are implementing such huge premium increases on silver plans that people shopping for ACA plans may find more affordable “gold” plans once you take into account ACA tax credits. In other words, make sure to shop around for plans in different “metal” levels.  

Trump's announcement wasn't exactly a surprise. Many insurance companies included the possibility of the president stopping CSR payments in their proposed increases for 2018.

One state, Oregon,  even suggested that payers increase their proposed rates on silver plans  by another 7.1 percentage points in 2018 to help offset the loss of CSR payments.

However, insurers that set rates expecting CSR funding may request to revise premiums for 2018. One state, Oregon, is even suggesting that payers increase their proposed rates on Silver Plans, which is the most popular plan option in the exchanges, by another 7.1 percentage points in 2018 to help offset the loss of CSR payments.

So, even if you have ACA plan options, you may see higher premiums than expected.

In one bit of good news, healthcare.gov now organizes plans based on your monthly premium after you account for tax credits and subsidies. This means shopping on heatlhcare.gov is more consumer-friendly than before and it’s easier to comparison shop.  

Tax credits may help buffer CSR payment loss

For most people in ACA plans, higher premiums will get swallowed up by tax credits. The ACA offers a premium tax credit for members in ACA plans. Those credits help members between 100 and 400 percent of the federal poverty level reduce premiums or out-of-pocket costs. More than 80 percent of ACA plan members are eligible for the tax credit.

What this means is that premium tax credits may offset premium increases for those who qualify. However, the tax credits won't help many middle class and upper-middle class members who don't qualify for the tax credit. They will face higher premiums and feel the brunt of the CSR payment cuts and subsequent premium increases.

What happens now?

The CSR payment issue is now in two different places -- Capitol Hill and the courts. Eighteen states and the District of Columbia sued because of Trump's CSR decision, but a federal judge ruled that Trump does not have to make the CSR payments. Insurance companies may also sue for the payments.

Congress is hoping to resolve the issue with legislation to continue CSR payments for two years. Senators were already talking about a possible bipartisan solution in September. Senators Lamar Alexander (R-Tennessee) and Patty Murray (D-Washington) were working on a plan for Congress to appropriate the money for the CSR payments through 2019.

This would have taken the payment issue away from the president, guaranteed insurer payments and stabilized the market somewhat. However, Republican leaders set aside that proposal and instead decided on pushing a large healthcare reform bill that would have repealed the ACA. That proposal failed to gain enough support, and now we're back to a possible bipartisan solution.

The Congressional Budget Office estimated the bipartisan plan would reduce the deficit by $3.8 billion over 10 years and not affect coverage premiums.

In addition to the Alexander-Murray plan, Republicans are proposing more conservative CSR bills that could include expanding Health Savings Accounts and delaying the employer mandate to offer health insurance.

There are still questions as to whether the Republican-led Congress can garner enough support for CSR payments. Congress may not take up the issue until December and could include it among other bills in a final end-of-year spree.

If Congress doesn’t pass CSR legislation, states may forge lengthy legal battles to get the federal government to pay. Some states may even try to make the payments in the interim in hopes of getting repaid later. Until all of these issues are resolved, the ACA exchanges will remain teetering, and insurers will discuss internally whether the business is worth it. Stay tuned

-- by Les Masterson

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